Be Prepared for Increased Demand of DEF

As more and more trucks requiring diesel exhaust fluid (DEF) take to the roads, truckstop and travel plaza operators are seeing revenue from DEF sales rise.

DEF is required in trucks that use selective catalytic reduction (SCR) to meet federal emission standards for diesel engines built after Jan. 1, 2010.Most original equipment manufacturers rely on SCR technology—only International trucks do not need DEF.

“SCR is here to stay. By the end of 2011, 25 percent of the trucks that show up at your travel plaza will use DEF,” said Chad Johnson, marketing manager with Gilbarco Veeder- Root. What’s more, 15 percent of vehicles are replaced annually, so those figures will continue to grow. Johnson added that 75 percent of trucks on the road by the end of 2015 will require DEF. Drivers have to fill with DEF every other time they fill up with fuel.

“If you’re not outfitting your location with product today, you’re missing all of this traffic that is moving by your location. This is all new business and new growth to your store,” said John Lounsbury, director of marketing and sales for Terra Environmental Technologies.

Both Johnson and Lounsbury addressed attendees during a DEF educational session at TheNATSOShow2011 in Lake Buena Vista, Fla.

DEF, which is a mixture of urea and demineralized water, is distributed in pre-packaged containers—typically 2.5 gallon jugs—or in bulk above- or underground-storage tanks.

Right now trucks require roughly a 2 percent dosing rate, which means a Class 8 truck is using 400 gallons of DEF a year. However, that amount could increase, further boosting DEF sales. “We see that being anywhere from a 2 percent to a 5 percent dosing rate. That is what we see in Europe,” Johnson said.

For those travel plaza operators who carry packaged DEF, Lounsbury advised them to look for pre-packaged containers that are vented so they will drain in 23 seconds as opposed to 2.5 minutes for unvented containers.

“Make sure you have a dispensing nozzle built into the package and that it is protected. You don’t want drivers grabbing a funnel because it could be contaminated,” he said.

DEF is easily contaminated, which is a concern for operators. It is also sensitive to temperatures and is susceptible to freezing below 12 degrees F. The corrosive characteristics and storage temperature requirements for DEF are very different from diesel fuel and gasoline.

“Everything in your shops that is based on oil and fuel is incompatible with the distribution of urea,” Lounsbury said.

Storage tanks and dispensers must be made of the appropriate materials. For example, copper, zinc, brass and aluminum will contaminate the product. “Those elements will go into the product and could de-activate the catalyst or vehicle’s SCR system,” Lounsbury said.

While operators will want to start with pre-packaged DEF, Lounsbury said eventually they will need to carry the product in bulk. He projects demand could reach 725 million gallons by 2015.

Johnson said operators need to keep in mind efficiency, throughput and convenience to the drivers. He said, “Drivers prefer to fill their fuel and DEF tanks and pay all from the same fueling position — without moving their rig or dealing with messy jugs and funnels. By 2015 you probably will need to offer DEF at every other island. Are you going to lose diesel gallons to the next guy if you don’t have DEF?”

Lounsbury calculated that locations that pump 750,000 gallons of diesel a month will be pumping about 15,000 gallons of DEF. “That is 6,000 2.5-gallon bottles on a monthly basis. That is two and a half pallets a day. Ultimately you have to get onto island,” he said.

Above-ground, on-island storage tanks and dispensing equipment can cost between $30,000 and $50,000. “The cost depends on how many bells and whistles you want,” Lounsbury said. He added that some bulk drum and tote dispensers start below$1,000.

At The NATSO Show, Gilbarco unveiled North America’s first fuel dispenser designed to offer DEF and diesel at the same fueling position — the Encore S DEF + 1. The dispenser minimizes the need for drivers to visit multiple locations for their fluid needs.

Johnson told StopWatch the cost to install the new Encore DEF + 1 pumps varies based on the type of DEF storage tank and the number of dispensers offering DEF at the fueling island. He noted that the new pump combines the need for diesel and DEF at a single fueling point. “This helps mitigate the cost of providing additional islands to dispense DEF only,” he said.

Lounsbury said operators are already starting to move toward bulk above-ground and underground storage. “The reason is they’re starting to see velocity move,” he said.

Pilot plans to have DEF pumps at more than 100 locations and Love’s plans to install DEF pumps at 40 locations this year. TravelCenters of America said that it will install diesel exhaust fluid dispensers at fuel islands in 50 of its truckstops during 2011.

“The technology we will employ integrates the DEF dispenser with our point-of-sale and other systems, so that drivers can purchase fuel and diesel exhaust fluid in a single transaction,” Thomas O’Brien, chief executive officer of TravelCenters, said in a written release.

“Drivers clearly want the convenience of filling their diesel and DEF tanks from the same fueling position, anywhere on the island,” Johnson said. “Our unique design allows retailers to make the most of their forecourt space and allows for the card transaction to take place at a single fueling position, improving forecourt throughput.”

Gilbarco’s dispenser is also designed to prevent DEF freezing and crystallization with a thermostat-controlled, heated cabinet and specially designed optional hanging hardware.

Lounsbury told attendees at The NATSO Show it is unlikely that locations will be able to mix their own DEF from concentrate. “The key issue is that anytime you dilute it, you need to do a full lab analysis to determine if the DEF is in spec or if it was mixed properly,” he said. “The more you concentrate urea, the harder it is to handle over time.”

Both Johnson and Lounsbury said that while they don’t offer direct financing, they can assist operators in the process. For example, Gilbarco doesn’t offer direct leasing, but works with a partner, Patriot Capital Corp., that can assist operators.

Whether operators are dispensing DEF in bulk or selling it on their shelves, Lounsbury recommends they look for partners who will provide signage. “Build awareness out on the street for your product. You don’t want to lose diesel purchases because people are driving by,” he said.

Lounsbury also recommends operators only carry DEF that holds the American Petroleum Institute (API) certification on the label. He also informed attendees that most vehicle manufacturers require the operator use only API-certified DEF.

This article originally ran in Stop Watch magazine. Stop Watch provides in-depth content to assist NATSO members in improving their travel plaza business operations and provides context on trends and news affecting the industry. The magazine is mailed to NATSO members bimonthly. If you are a member and not receiving Stop Watch, submit a request to be added to the mailing list. Not a member? Join today or submit a request to receive additional information.